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Laos sees 1.75 percent inflation growth in February

The Consumer Price Index (CPI) in Laos continued to rise in February amid concerns that the nationwide celebration of Visit Laos Year would drive up consumer demand for goods and service.

According to a report from the Lao National Statistics Bureau, the nationwide CPI rose from 103.30 points in February. This month-on-month change in the index resulted in a nationwide inflation rate of 1.75 percent in February.

In January, the inflation rate showed 0.95 percent growth. The average inflation growth in Laos in 2017 was 0.83 percent, according to data posted on the official website of the Lao National Statistics Bureau. The website did not give details of the factors driving inflation but it is clear that the trend is for the inflation rate to increase. The existing data provide a big picture which shows that the current consumer demand for goods and services is higher than the capacity of the nation to supply.

Observers say the rapid inflation growth is due to several factors, one of the most influential of which is the rising price of fuel Laos has levied more excise taxes on fuel, which has forced businesses, especially those related to transport and agriculture, to adjust the price of their goods and services.

The growing demand for goods and services is another factor in the rising inflation rate. This being Visit Laos Year, the increasing number of tourists is driving up overall demand for goods and services The Lao National Statistics Bureau admitted in January that the festival season creates higher demand and thus drives up inflation. Apart from the rising demand for goods and services, the appreciation of the Thai baht and US dollar against the kip poses a threat to the control of inflation. More than 50 percent of goods on sale in Laos are imported from neighboring countries, mainly Thailand.

The government is aware of the challenges involved in keeping inflation under control. At the end of last month, the Prime Minister's Office instructed the Ministry of Agriculture and Forestry to boost productivity to ensure sufficient supply of goods over Lao New Year. The holiday takes place from April 14 to 18 and is expected to produce a surge in demand for goods and services.

Observers say that an increase in the supply of goods and services would make it easier to control the prices of goods and services. But they admitted that boosting productivity was not an easy task.